Financial Services Bill

Part of the debate – in a Public Bill Committee at 10:41 am on 8 December 2009.

Alert me about debates like this

Ian Pearson: There are a number of things that I want to say in response to that. The first thing, which I think we should always remember and never lose sight of, is the fact that responsibility for assessing risks in a business should lie, first and foremost, with the managers of that business. Quite frankly, some of the management in the banks that got into difficulty was poor in doing that, or reckless in not properly taking account of the risks to its business. I also think that on top of that, shareholders have a responsibility to ensure that their investments are being properly run by competent managers. There have been some issues there and things that we can discuss. There is also an issue about whether there has been adequate financial regulation and assessment of the risks of the business as well by the independent regulator.

You tempt me to talk about product regulation as well when you talk about whizz kids designing products. As you are aware, we tended to focus not on product regulation but on regulation of the business as a whole and look at risk in the context of the risk to the business as a whole. There are certain instances where it would be right to look at the regulation of individual products. Also one of the lessons from the past couple of years is the need to look at the risks inherent in some business models as well. I am not sure whether in both those areas these were adequately and properly assessed either by managers, shareholders or, indeed, the regulator.